Starting a Micro Lending Company

Micro lenders provide small loans to businesses or private individuals. The lender could be profit driven or non-profit organization.
Micro lenders include associations, thrift societies, high net worth individuals and cooperatives. Micro lenders earn income by offering short term loans at high interest rates. Here are a few ideas on how to establish a micro lending company.
Starting a Micro Lending Business
  • Choose a business name
  • Learn the business
  • Define your customer demography
  • Write a business plan
  • Secure funds
  • open a bank account
  • Draft a guide
  • Hire a lawyer
  • Incorporate
  • marketing
  • How to Start a Microfinance Bank
calculator and coins
Choose a Business Name
To start your lending company you need a business name. Make sure the name contains keyword elements of your service.
Select an ideal location, rent and furnish the office. The next step is to write a business plan.
Learn the Business
It is important you learn the trade and build experience. You could attend a higher institution, seminars or symposiums.
Learn through online courses, websites, e-books and tutorials. You could try internship, apprentice programs or paid employment with a lender.
There are prohibited and acceptable practices in the money lending business. Study the federal fair debt collection practices act and appropriate debt collection protocols.
Define your Customer Demography
Before disbursing loans to qualified candidates you need to identify your customers. Which category of customers fit your business template? You could concentrate on small business loans, mortgage loans or personal loans.
Write a Business Plan
You can draft a micro lending business plan and conduct a survey. The plan should have an executive summary and company description.
Focus on your market analysis, funding sources, sales and financial projections. You need to set goals, profit/lass and how to acquire operational licensing.
Funding Sources
The micro lenders need to have available funds to facilitate loans. The business could use company funds, personal funds, venture capitalists, crowdfunding or investors.
Find an ideal location in commercial area or close to banks. Non-profit loan companies rely on federal grants and international charity organizations.
  • Company funds
  • Personal funds
  • Venture capitalists
  • Crowdfunding
  • Investors  
Open a Bank Account
Open a savings and current bank account for your company. The loans you disburse should emanate from your company account.
To open your corporate account you need a tax identification number, business license and passport photograph. Others include articles of incorporation and business name.
Draft a Guide
You should consider drafting a document as a guide to evaluate applicants. The document should focus on borrower’s credit rating, history, financial strength and balance sheet. Other considerations are collateral, guarantors, and income.
Hire an Attorney
It is important you build a relationship with an attorney to draft contractual agreements. The lawyer is also useful to defend against litigations and disputes.
Fill an article of association and register the business as a LLC. Obtain a money lending license, DBA and SEC. You need a business tax identification number and insurance cover.
Build a Website
Choose a domain name and host plan to build your website. Include services, location, about us page, terms and conditions including contact information.


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